Energy retailers call for end to solar subsidies

Australians have taken up solar en masse over the past decade, thanks largely to a range of subsidies and incentive schemes that have made going green affordable for thousands of homeowners. But now there are calls from prominent energy leaders to end one of the last remaining solar subsidies – the Small-Scale Renewable Energy Scheme (SRES).

At the National Energy Summit held in Sydney in October, hundreds of experts came together to discuss the state of the energy market and how to fix it. Amongst all the politics and economic arguments, there was one thing a lot of people could agree on – It’s time for solar subsidies to end.

Chief Executive of the Australian Energy Market Operator (AEMO), Audrey Zibelman, told the summit that Australia is experiencing a shift in its energy dynamic unlike any other country. She said that about six solar panels are installed every minute in Australia. Meanwhile the Chairman of the Energy Security Board, Kerry Schott, described the state of the solar market in Australia as “anarchy”, caused by uncoordinated policy and the break-neck uptake of solar.

What followed were calls to end the SRES. Origin Energy Managing Director, Frank Calabria, said the price of solar has come down significantly since the subsidies were introduced and that Australians are already enthusiastic about solar. “We need to phase out the small-scale renewables scheme, it does not need subsidies anymore,” he said.

The Head of Energy for EnergyAustralia, Mark Collette, agreed with Mr Calabria, telling the summit that: “The whole case for the subsidy was built around emissions and emergence of the technology and getting it running”, adding “It is running faster than a freight train, it doesn’t need a subsidy any more”.

Chairman of the Australian Competition and Consumer Commission (ACCC), Rodd Sims, said that it is rational economic behaviour for consumers to want to reduce their power bills by installing solar panels.

Mr Sims re-iterated one of the key recommendations in the Final Report of the ACCC’s Retail Electricity Pricing Inquiry, that SRES should end in 2021, instead of 2030 as was originally planned. Mr Sims added that the solar subsidies are cross-subsidised by customers that either can’t afford solar, or are unable to install it as they are renting or live in apartments.

Recent years have also seen a winding back of other incentive schemes. In January 2017, the New South Wales Solar Bonus Scheme came to its natural conclusion, ending entitlements to feed-in tariffs of up to 60 cents per kWh. This came after Victoria and South Australia also rolled back their solar bonus schemes. Even if the federal SRES scheme ends however, customers in Qld, SA and Vic may still be eligible for state-funded solar installation subsidies.

What is the Small-Scale Renewable Energy Scheme?

The SRES provides a large financial incentive for households that install a solar system or other small-scale generator, such as small wind turbines, hydro systems, or air source heat pumps. When customers purchase a small-scale generator, they receive what are called ‘small-scale technology certificates’ (STC). The number of certificates received depends on the size of the system and where you live.

Electricity retailers are required by law to purchase a quota of STCs each year and surrender them to the Clean Energy Council. Through the sale of these certificates, the cost of installing solar panels is reduced by thousands of dollars. For more information, check out our guide to solar.

Is solar still worth it?

The current government has no clear intention to end the SRES before 2030, at the time of writing, but it is argued that the price of solar has come down so dramatically over recent years that there no longer exists a need for the subsidies.

While solar will likely remain a profitable investment without the subsidy, it will of course be cheaper with the subsidy. For this reason, you should watch this space for any solar updates. If the subsidy is in the firing line, then it could be worth installing solar sooner rather than later.

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